Reliance Nippon Life MF sets IPO price band, to mop up Rs 1,542 Crore

Reliance Nippon Life Asset Management (Mutual
Fund) is aiming to raise about Rs. 1,542 crore from its initial public offering
(IPO). The company has set a price band of Rs. 247 to Rs. 252 per share for its
IPO, and when calculated at the upper band of the issue price, the company will
be valued at around Rs. 15,422 crore.

Reliance is one of the largest asset management
companies in India and the second most profitable fund house. The asset
management company is a joint venture between Reliance Capital and Nippon Life.

Currently, Reliance Capital holds 46.57% while
Nippon Life has 49% stake in the company. Post IPO, holding of both the
companies will be 42.88% each, 10% of public and remaining with other
shareholders.

The issue will open on October 25 and close on
October 27. The anchor investor bidding will be on October 24. Bids can be made
for a minimum of 59 shares and multiples of 59 thereafter. The offer comprises
a fresh issue of 2.44 crore shares and an offer for sale 3.67 crore shares. The
offer for sale comprises 2.54 crore shares from Nippon Life and 1.12 crore
shares from Reliance Capital.

The net proceeds of the fresh issue will be used
for setting up new branches and relocating certain existing branches, upgrading
the IT system, advertising activities, lending to its subsidiary, and funding
inorganic growth among other things. The company will not receive any money
from the offer for sale.

The company with total asset under management
(AUM) of Rs. 3.62 lakh crore, is
involved in managing mutual funds including ETFs; managed accounts, including
portfolio management services, alternative investment funds ( AIFs) and pension
funds.

In 2016-17, the company had revenues of Rs.1,435
crore and posted a profit after tax of Rs. 402 crore. According to its red
herring prospectus (RHP), the company grew at a compounded annual growth rate (CAGR)
of 15%.

From left to right Reliance Nippon Life Asset Management vice president Mr. Yuki Tanaka, CEO Mr. Sundeep Sikka and CFO Mr. Prateek Jain at a press conferance in Mumbai

“ Going forward, the growth of the industry lies
in retail in small cities and towns and that is where we have demonstrated our
capability. And we believe that going forward will keep adding to the growth of
the company,” said Mr. Sundeep Sikka, chief executive officer and executive
director of the company.

In 2017, 24 companies raised Rs. 30,682 crore
through IPO. Listing gains and returns by newly listed companies as also the
positive sentiment in the broader market are among the reasons attributed to
the trend.

SBI Life, CICI Lombard, BSE, HUDCO, CDSL, Avenue
Supermarts, Shankara Building Products, S Chand and Company, and Cochin
Shipyard are some of the companies that have completed their IPO in the last
nine months.